U.S. dairy exports cooled during September compared with prior months but were still significantly higher than September 2012. Declining month-over-month sales were mostly due to a seasonally low output of milk powder, whey products and cheese, according to a report last week from U.S. Dairy Export Council (USDEC).

Production of nonfat dry milk/skim milk powder, for instance, was just 59,240 tons, down from a peak of 93,000 tons in May. Even so, U.S. suppliers shipped 77 percent of their equivalent September production of NDM/SMP, and those exports were up 36 percent from a year earlier. That 77 percent equivalent is a healthy number, said Alan Levitt, USDEC vice president of communications. Over time, the U.S. needs to be exporting half of its powder or it will back up on the domestic markets, he said.

The volume and value of dairy exports in September was slightly lower than a few previous months, but a lot had to do with the low time of the year for milk and product production, he said. For the past seven years, September and October have been the lowest months of the year for milk production. And milk components fall in the summer, bottoming out in July, he said.

The combination of less milk and lower fat and protein levels results in manufacturers making less product, so there’s less product to sell this time of the year. For the past 13 years, milk powder production has run 30 percent lower in the third quarter of the year compared to the second quarter, he said.

Despite the export slow down in September, U.S. dairy exports year to date are strong, with milk powder, cheese, lactose, and whey export volumes tracking at record highs, and butterfat and whole milk powder exports showing improvement in recent months, USDEC reported.

Exporters shipped 157,267 tons of milk powder, cheese, butterfat, whey, and lactose in September, up 22 percent from the prior year. On a value basis, they shipped $593 million, up 48 percent from September 2012, bringing year-to-date exports to $4.92 billion, 26 percent above last year.

On a volume basis, exports during September were up 40 percent for cheese, 36 percent for nonfat dry milk, 24 percent for dry whey, 2 percent for lactose, and 720 percent for butter year over year, and represented 16.6 percent of September milk production, Levitt said.

Dairy exports continue to run strong year over year. Exports of nonfat dry milk, for example, have been over 100 million pounds for the sixth straight month. That’s very strong, said Eric Meyer, president of HighGround Dairy, a division of Chicago-based HighGround Trading Group, a brokerage and consulting firm.

Exports will continue to be sharply higher the rest of the year compared with 2012, as long as U.S. prices remain competitive, he said. Until global milk production meets extremely strong demand, the U.S. will continue to see higher dairy exports than the previous year. That could come as early as mid first quarter 2014 or as late as the second quarter, he said.

Milk production is expected to grow in all major milk-producing regions in the coming year. New Zealand, the EU and U.S. are already showing signs of an ambitious recovery. But demand for immediate delivery continues to out pace supple-side growth on a global scale in the near term, HighGround Dairy analysts reported last week. Global markets have not yet found a price level or enough supply to spark any real push back on prices from the global community, they stated.

While production is only one component in export sales, the U.S. will have more product available in the months ahead, with both milk production and component levels rising from December through the spring flush, Levitt said.

Competition is another factor in the equation. But the outlook is good, and conditions are still favorable for U.S. exporters, he said